One of the biggest casualties of the Mortgage Crisis has been the virtual demise of the Home Equity Line of Credit which had been so popular over the last 5 years. Some of the biggest losses suffered by lenders have come from this product. Most institutions have limited the CLTV, combined loan to value, to as little as 70% of the appraised value of the property. This coupled with falling home values has limited the ability of home owners to tap into the cash in their homes.
Fortunantely, we are starting to see the local, regional banks and credit unions jumping back into the marketplace and allowing higher loan to values. One of my local credit unions is allowing a cltv to 80%.
While abuse of this product has contributed to the current crisis, prudent use allows cash strapped home owners to improve their property and pay for large ticket items such as education. The Home Equity Line of Credit has earned a place in the market.
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